Despite tough market conditions, the results of the first Grant Thornton Entrepreneurs' Insight survey last month, are surprisingly upbeat

It's no exaggeration to say that the economic news has become apocalyptic. The International Monetary Fund and the OECD predict "major downturns" globally and in the UK. The British Chamber of Commerce thinks that we are in recession and that the effects of the turmoil in international markets are already having an impact on the real economy and, on the basis of information from its members reported that the picture for the backbone of the British economy is at best gloomy if not downright depressing.

So how refreshing it was to see the results of the first Grant Thornton Entrepreneurs' Insight survey last month. It found that although the going is tough, 70 per cent of UK entrepreneurs* are determined to soldier on through the current conditions and stick with their business come what may. More than this, an index created from responses to questions about economic and business conditions suggested that founders and owners of smaller, private businesses are still positive about their own business prospects. 

For example, over the next 12 months 71per cent thought their sales volumes would increase or stay the same, 86 per cent said their market share would increase or stay the same and 76 per cent said their turnover would increase or stay the same. In the words of a member of Director's panel of entrepreneurs, "With every downturn comes a host of opportunities—why should we be gloomy?"

Even more remarkable was the fact that the things that are usually cut during economic slowdowns, like training or corporate responsibility expenditure, appear still to be important features of the UK's small firms.  93 per cent said they wanted to make their companies great places to work, 60 per cent were investing in recruitment over the next 12 months and nearly 90 per cent of the respondents were investing in training. Sixty per cent of company founders and owners said that their greatest asset was people and nearly 60 per cent argued that they wanted to create value in the form of social, economic and environmental returns on investments. 

Alysoun Stewart, head of entrepreneurial advisory at Grant Thornton, said the findings demonstrated real resilience despite the uphill battles that many UK entrepreneurs faced, a fundamental confidence that was going to be instrumental in driving the coming economic recovery.

"It is extremely heartening to find UK entrepreneurs unbowed by the current economic situation despite many admitting that, if anything, the conditions they face are going to get worse. While the consensus is realistic, it is not pessimistic, but an example the country could do well to follow."

Entrepreneurs are often caricatured as eternally optimistic but the results did not suggest an unrealistically rosy picture of what's going on at the moment.  For example, 77 per cent said that current conditions are exerting fair or a great deal of pressure on their personal life and more than half said that current conditions were affecting them negatively or very negatively. 55 per cent said that they had less control over their business performance and 66 per cent saw the economic conditions as getting worse over the next 12 months.

In spite of the business environment, though, the average responses to questions about business and economic conditions and their impact on both current operations and future growth and sustainability were unerringly positive. The researchers compiled responses to a set of fifteen questions around these areas into a general index where a total neutral set of responses would have given an index ranking of 100. 

The overall ranking from this first survey came out at 112 which, in the present turbulent times, is quite remarkable. There were warning signs in the "lead indicators", for example 33 per cent of respondents thought it would be harder to attract investment and 41.5 per cent thought it would be harder to gain growth finance, but as only 8.8 per cent said that raising finance was their biggest headache at the moment, the message was clear: downturns in the financial sector will make our operating environment more difficult but we are confident that we will get through, so long as we keep investing in the "hidden value" in our business: people, innovation and brand.

At first sight, all these results look too good to be true. Maybe they just tell us that the effects on the real economy of the financial crisis have yet to filter through to small business and maybe the next survey in six months will paint a more negative picture. 

Yet Director's Entrepreneurs' Panel was similarly positive with participants arguing that really the main challenges are real ones: cashflow and profitability and these results which were corroborated by the survey with these two the biggest concerns of the business at present. And as the survey was conducted during August and September, a time which saw the collapse of Lehman, the near-collapse of HBOS and Bradford and Bingley, the US government bail out of AIG, uncertainty around the US government's rescue for the whole US financial sector and plummeting stock markets around the world, it can't be accused of not capturing the Zeitgeist!

Of course the challenges for small and entrepreneurial businesses are going to be tough as we steer ourselves through the next 12 months and any packages to underwrite loans to small business or provide guarantees to deposits in line with those for personal savers (as announced around the Bradford and Bingley nationalisation), have to be seen as steps in the right direction. 

After all, entrepreneurs and small businesses are the life-blood of the British economy and will lead us out of the current crisis through their resilience. Testimony to this is the fact that 60 per cent say their costs will rise over the next 12 months but only 33 per cent said they would be increasing their prices. We cannot afford to ignore their needs now if they are to be able to stick to this promise.

The Grant Thornton Entrepreneurs' Insight survey was conducted by Delta Economics and IFF Research between the 18th August and the 30th September.  Telephone interviews with 751 founders and owners of businesses with turnovers between £5m and £150m were conducted. Respondents came from the 9 English regions plus Scotland, Wales and Northern Ireland.